Tuesday, August 5, 2014

SA: Momenta Pharmaceuticals Heading For A Repeat

While most promising young biotechs devote all resources to development of new drugs, Momenta Pharmaceuticals (NASDAQ:MNTA) is adopting a fairly unusual strategy of aiming for the middle. Its plan for developing biosimilars -- generic versions of complex biologics -- yielded short lived success in the past, and another winner is likely on the way.

Unlike small molecule generics, biosimilars have a much higher barrier to entry, offering jucier margins in return. Deep-pocketed partners Baxter (NYSE:BAX) and Novartis (NYSE:NVS) are eager to exploit Momenta's proprietary platform, as it may offer significant savings on development costs. If those savings don't materialize, Momenta could find itself in trouble.